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REPUBLIC OF NAMIBIA

HIGH COURT OF NAMIBIA, MAIN DIVISION, WINDHOEK

RULING ON EXCEPTION

I 2376/2015

In the matter between:

TONATENI HEBEI CONSTRUCTION CC PLAINTIFF

and

THE UNIVERSITY OF NAMIBIA FIRST DEFENDANT

OMATUNGO PROPERTY DEVELOPERS CC SECOND DEFENDANT

ABSAI MUNENGUNI THIRD DEFENDANT

ANDJAMBA CONSTRUCTION CC FOURTH DEFENDANT

JOHANNES T. ANDJAMBA FIFTH DEFENDANT

Neutral citation: Tonateni Hebei Construction CC v The University of Namibia (I 2376/2015) [2017] NAHCMD 146 (19 May 2017)

CORAM : MASUKU J

Heard: 14 March and 4 April 2017

Delivered: 19 May 2017

Flynote: LAW OF CESSION – Validity of a cession and the extent of the

interest ceded to enable action proceedings based thereon - Effect of invalid cession on instituted proceedings. COMPANY LAW – Law of partnership and joint ventures – the right of a party to a joint venture to bring proceedings for the benefit of the joint venture before the dissolution of the joint venture – the applicability of the actio pro socio - CIVIL PROCEDURE – Exception – effect on the proceedings of the plaintiff not having a cause of action when the action was first lodged.

Summary: The plaintiff instituted an action against the defendants on the basis of an agreement of cession executed in its favour. The claim was based on a a joint venture agreement between the 2nd and 4th defendants regarding construction works tendered to the joint venture by the 1st defendant in terms of which any monies paid in respect of the works were to be paid into an account opened for the joint venture. The plaintiff instituted a claim to wit that the money due in respect of such works was unlawfully converted into the account of the 3rd defendant. Various exceptions were taken on behalf of the 2nd and 3rd defendants to the effect that the plaintiff had no right in law to lay the claim based on an agreement of cession; that the partnership (joint venture) had not been brought to an end therefore resulting in the plaintiff not being entitled at law to bring the claim as it purported to.

Held – that the agreement of cession was invalid for the reason that it was entered into after the initial proceedings had been commenced and that the plaintiff could not have ex post facto rights to continue proceedings it had no right to institute at inception.

Held – that regarding the cession, the plaintiff could only have the right to claim the rights and interests of the cessionary and no more. To the extent that the plaintiff claimed the entire amount allegedly due to the joint venture, it was found that the claim was incompetent therefor.

Held further – that in the law applicable to partnerships would, for purposes of the judgment be assumed to apply to the joint venture as well, without stating decisively that that position is correct.

Held further – that to the extent that the law applicable to partnerships applied to a joint venture, the argument that the plaintiff could not sue for the amount in question before the settlement of the accounts between the parties was incorrect.

Held – the actio pro socio applied in the circumstances of this case and which enabled a partner to sue for property belonging to the joint venture even before the settlement of accounts by the parties to the joint venture agreement.

The exception was upheld with costs consequent upon the employment of one instructing and one instructed counsel and the plaintiff was granted leave, in relation to those matters in terms of which it had the right to sue, to amend its particulars of claim accordingly.

ORDER

1.  The 2nd and 3rd defendants’ exception to the plaintiffs’ amended particulars of claim is upheld with costs consequent upon the employment of one instructing and one instructed counsel, less 20% thereof.

2.  The plaintiff is granted leave, if so advised, to file amended particulars of claim in respect of the first alternative claim within then (10) days from the date of this judgment.

3.  The relevant defendants are granted leave to file their respective amended pleas to the said amended particulars of claim within seven (7) days from the filing of the amended particulars of claim.

4.  The plaintiff is to file its replication, if any, to the said amended plea within seven (7) days from the filing of the amended plea, if any.

5.  The matter is postponed to 5 July 2017 at 15:15 for a status hearing.

6.  The parties are ordered to file a joint status report three (3) days before the date mentioned in para 3 above.

RULING

MASUKU J:,

Introduction

[1] Serving before court is an exception launched by the 2nd and 3rd defendants to the plaintiff’s particulars of claim. The basis for the exception is that the particulars of claim lack averments necessary to sustain an action against the said defendants. Needless to say, the said defendants deny that the particulars of claim are excipiable in the manner alleged or at all.

Background

[2] In order to place the issue in proper perspective, it is necessary that I indulge a little into the historical background that gives rise to the question submitted for determination. I summarise the background facts below:

The parties

[3] The plaintiff is a close corporation duly incorporated in terms of the Close Corporation laws of this Republic. Its principal place of business is situated at no. 39 Bowker Street, Klein Windhoek. The 1st defendant, on the other hand, is the University of Namibia (UNAM), a body corporate established in terms of the provisions of s. 2 and 3 of the University of Namibia Act. [1] Its place of business is situated at No. 340 Mandume Ndemufayo Avenue, Pionierspark, Windhoek.

[4] The 2nd defendant is Omatungo Property Developers CC, a Close Corporation duly incorporated in terms of this Republic’s Close Corporation laws. Its principal place of business is situated at Erf. 1935 Santa Clara Street, Otjomuise, Windhoek. The 3rd defendant is Mr. Absai Munenguni, an adult male Namibian businessman, who also serves as the sole member of the 2nd defendant, described below.

[5] The 4th defendant is Andjamba Construction CC, another close corporation also incorporated in terms of this country’s close corporation laws. Its place of business is situated at 2nd Floor, BRB Building, Dr. Bernard May Street Windhoek. The 5th defendant is Mr. Johannes T. Andjamba, an adult male business man and sole member of the 4th defendant.

The cause of action

[6] The plaintiff claims that in or about 27 February 2013, at Windhoek, the 2nd defendant and the 4th defendant, duly represented by the 3rd and 5th defendants respectively, entered into a joint venture (partnership) agreement for the design and supervision of civil installation of lecture halls and offices of the 1st defendant’s Rundu Campus. It is averred that a tender for the works was awarded jointly to the 2nd and 4th defendants.

Alleged terms and conditions

[7] The plaintiff further alleges that the terms of the aforesaid joint venture agreement included the following express, alternatively tacit terms, namely that:

(a)  ‘the 2nd and 4th defendant would trade under the style Andjama Construction & Omutongo Property Development CC Joint Venture for the purpose of completing the design and supervision of the said works, pursuant to the tender.

(b)  all the processes and release of all certified payments to be made and paid by the 1st defendant for the aforesaid works, were to be paid for the benefit of the joint venture partnership into a special account in the name of the joint venture, opened with First National Bank, Namibia.’

[8] It is further alleged that on 27 February 2013, a written sub-contractor agreement was signed in Windhoek between the plaintiff and the joint venture. The latter was represented by 3rd and 5th defendants. In this regard, it is further averred, a power of attorney in favour of the plaintiff was executed. Following below were some of the material terms:

(a)  The plaintiff was nominated by the 2nd and 4th defendants and granted power of substitution to be the true and lawful agent of the joint venture and to generally manage and transact all its business affairs and would in this regard -

(i)  Ask, demand, sue, and recover from all persons sums of money due which shall become due;

(ii)  Settle and adjust accounts as the joint venture deems fit and necessary and to compound same and accept from the whole;

(iii)  To grant receipts, acquaintances, and releases for any payment, delivery or other settlement, and to consent to the cancellation of any bond, obligation, or other deed whatsoever; and

(iv)  To commence, prosecute or defend and at pleasure, to relinquish any actions, suits or other proceedings at law or equity in any of the courts of Namibia.’

[9] It is further alleged that on or about 24 July 2013, the 3rd defendant, duly authorised thereto, and acting on behalf of the joint venture, instructed the 1st defendant in writing to process and release all certified payments due by the said 1st defendant into the joint venture’s account. To this end, the joint venture account was registered with the Receiver of Revenue.

[10] The plaintiff avers that contrary to the agreement referred to in the immediately preceding paragraph, the 3rd defendant, unbeknown to it, and without its approval, nor the knowledge of the joint venture, unlawfully and fraudulently caused money due to the joint venture from the 1st defendant, to be deposited into its account and not into the joint venture account as per the agreement. The amounts paid into this account, unlawfully, as claimed by the plaintiff amount to N$3, 496, 833.15. These are the amounts claimed by the plaintiff against the 1st, 2nd and 3rd defendants.

[11] In an alternative claim, the plaintiff sues the 2nd defendant on the basis of its fiduciary relationship to the 4th defendant and that as such, it had a duty not to place its interests above those of the joint venture and was under a duty to act in good faith regarding partnership assets. In this alternative claim, the same amount is sought from the 2nd defendant.

[12] A further alternative claim is laid against the 1st defendant in respect of a similar amount. In this regard, it is alleged that the 1st defendant was presented with certificates for payment in respect of the work done and that such payments were to be made into the joint venture account referred to earlier. It is averred that despite being so presented with the certificates, the 1st defendant refuses or fails to pay the said amounts into the joint venture account. A further alternative claim for the same amount based on negligence is made against the 1st defendant.

The exception

[13] In this regard, it must be mentioned that the 1st defendant pleaded over and in this regard filed its plea, whose contents it is not necessary at this stage to traverse, save to state that it denies liability to the plaintiff’s claim. It is to the 2nd and 3rd defendants’ exception that the court’s attention turns in this regard.

[14] Stripped to the bare bones, the aforesaid defendants’ exception is based on the cession alleged in the particulars of claim. In particular, the contentions of the said defendants are three. First, it is averred that the cession by the 5th defendant is invalid for the reason that the 5th defendant does not have rights to the claim which he could have ceded as he is not a partner in the context of the partnership agreement, and does not derive any rights to claim by virtue of the fact that he is the 5th defendant’s sole member.

[15] Second, it is averred that the cession by the 4th defendant is also invalid as it purports to cede the partnership’s entire alleged claim for damages sustained as a result of the alleged wrongful actions of the 3rd defendant. It is further averred that is so for the reason that if there are any damages that may have been sustained thereby, these are due to the partnership and not to the 4th defendant.

[16] Last, but by no means least, it contended that the said cession is also invalid for the reason that the share of the 4th defendant, if any, to the damages, could be computed only once the settlement of the partnership accounts between the 2nd and 4th defendant had taken place.

[17] From a close consideration of the pleadings, together with the notice of exception, two things are apparent. First, the exception is directed and predicated on the claim based on the cession. In this regard, it is common cause that there is the main claim launched against the 1st, 2nd and 3rd defendants, jointly and severally. It is based on allegations of fraud.

[18] The claim that is based on the agreement of cession and which accordingly forms the basis of the exception, from my reading, is the first alternative claim, which is against the 2nd defendant Omatungo Property Developers CC. It is claimed, in that regard, that the 2nd defendant is a partner in the joint venture and therefor stood in a fiduciary relationship to the 4th defendant. The plaintiff’s alternative claim, as averred, is based on a cession in terms of which the 4th defendant ceded its rights in writing to the plaintiff and it is the validity of that cession that is being challenged in the exception.